Political Frenzy

Photo: news.nationalgeographic.com

I have been getting several responses to my previous blog on Exxon tax payments in which I said “we do not tax their absurd profits.” I was not being clear; I am not saying that Exxon doesn’t pay their taxes, just that their unreasonable profits aren’t taxed at a higher rate. Yes it is true that Exxon paid over $9 billion in taxes last year, but it was not to only the United States but also several foreign governments.

Based on what they paid in taxes their overall effective income tax rate is 46%. But keep in mind that this is to several governments, not just ours. So to say that they pay a higher tax rate than other corporations is false.

I know that there is a media bias towards bad news and I do not want to advance that agenda. My point with the blog was to try to come to an understanding as to why we pay over $4 a gallon for gas and how a company that sells the gas is making record profits.

Saudi Arabia has said, “There is no justification for the current rise in prices,” and Congress doesn’t seem to care. They shoot down a bill that would not only end tax breaks for oil companies, but also tax their windfall profits and make a way for energy price gouging a federal crime. (Why is energy price gouging not a federal crime by the way? We will talk about this on another day.) On the same day they shoot down a bill to provide companies who develop alternative energy tax credits.

The only tax breaks oil companies should be receiving are for research into alternative energy.

We are told that the high cost of gas at the pump is because of a supply and demand problem. If there is such a supply & demand problem with oil how can a company make a record profit? If oil costs more, wouldn’t their profits stay the same? Let’s look at a simple example:

Product A costs its maker $2, the company sells it for $4, making a $2 profit.
The materials for product A shoot up and it now costs $3 to make the product. The company now must sell it for $5 to maintain their current profit.

How can the company have record profits without raising their price? (Keep in mind that energy price gouging is not a federal crime…yet)

The company must raise it’s price to make ‘record profits’ such as Exxon has done. The company starts to sell product A for $10 citing a supply and demand problem. They are now making $5 profit per item.

The whole situation with oil in our country is complicated, gee I wonder why. If it were clear the people would demand that the people who they elect to represent them would do something about it.

I just wish we could put our energies into solutions instead of labeling people as left or right.